Thursday, March 31, 2016

Enlargement vs Deepening. What future for the EU? The EU needs an IGC. Badly. To decide on its future.

Enlargement vs Deepening. That was the big strategic dilemma in the EU years ago. The main proponents of enlargement were the UK and Germany. The UK hoped enlargement would hinder the deepening of the EU. It has worked. 19 members may be in the Eurozone but Eurozone and the EU as a whole are facing considerable problems.

How can a single market work properly without a single language, a single tax system, a single bureaucracy? With a single currency for merely 19 out of it 28 members?

The current migration crisis shows the lack on union within the European Union.

The decision of the ECB to lower interest rates to 0% shows its despair in trying to make the Eurozone more competitive. Triche interest rate policies some ten years ago hurt the cohesion of the Eurozone significantly and it has not recovered.

A de-industrialising EU cannot create enough jobs to curb the joblessness issues.

If the UK decides to leave the EU in a few weeks, an earthquake will shake the EU. It better. The EU needs a wake up call.

Is the EU a failure, so far? Yes. It has taken 60 years and failed to become a United States of Europe.

Can the EU change its course and succeed?
Yes, it can.

How likely is that? Not very likely.

Will the EU dissolve? Not likely.

What should member states do?
Well, they are focusing on national affairs increasingly, taking care of their national needs.

What is the future for European business? Well, 2.5 decades after 1992, there is no European business, merely, companies doing business across the EU. 28 tax regimes, 23 languages, what kind of a single market is that?

The existence of world trade and the EU puts pressure on the cohesion of the EU. Why should members stay members when world trade is now more free than ever and one (eg the UK) can sell to Europe without needing to be part of the EU.

The EU needs an IGC. Badly. To decide on its future. I argued that 2 years ago. The need is more urgent today. Even after the UK referendum.

An IGC should decide whether to move the EU into a United States of Europe (as some want and it makes economic sense) or take back the EU to the Common Market it was decades ago (that would please the UK). More or less union make sense, both, as strategic option. The current status of the  union does not.


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Nick

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